IRS extends additional tax deadlines for individuals to May 17
With Tax Day officially moved to May 17, 2021, there were several associated deadlines that normally go hand in hand with the individual tax deadline but were not specially addressed.
On March 29 the IRS addressed the most pressing of these with Notice 2021-21, which specified that the following tax related deadlines were also moved to May 17, 2021, to correspond with the individual income tax deadline.
The most item not covered with Notice 2021-21 is First Quarter 2021 Estimated Tax Payments which are currently still due April 15. Were monitoring this situation and will provide and update should this date also change to May 17.*
For more information, a link to the IRS announcement is here [LINK] along with a downloadable copy of Notice 2021-21 below.
* correction from early posting which incorrectly listed stated Q1 2021 Estimated Tax Payments were due May 17.
The six-month free COBRA period is from April through September 2021
Forbearance and Eviction Moratoriums
According to December survey data collected by the Bureau of Labor Statistics,
Roughly 26.8 million Americans are either unemployed, experiencing reduced pay and work hours or have left the labor market entirely.
https://ramlcpa.link/3d56d | Journal of Accountancy
While not law just yet, it is expected to be signed by the president as soon as today.
While we know many key details, there are some key details we don't know, especially regarding the PPP Loan Program. The most pressing in my mind are bank participation and when applications will be accepted as some time will be needed to restart the program.
Additional details will be forthcoming and the below summary will probably be updated over the coming days for additional details and clarifications.
Below, I summarize the key provisions in the bill:
PPP Round 2 & EIDL
$325 billion in aid for small businesses struggling after nine months of pandemic-induced economic hardships.
$166 billion for economic impact payments of
$120 billion to provide workers receiving unemployment benefits a
$25 billion in emergency rental aid and an extension of the national eviction moratorium through Jan. 31, 2021.
$45 billion in transportation funding, including
$82 billion in funding for colleges and schools, including support for HVAC repair and replacement to mitigate virus transmission, and
$10 billion in child care assistance.
$22 billion for health-related expenses incurred by state, local, Tribal, and territorial governments.
$13 billion for emergency food assistance, including a 15% increase for six months in Supplemental Nutrition Assistance Program benefits.
$7 billion for broadband expansion.
The bill also extends the
and temporarily allows a
Business Meals 100% Deductible
PPP Round two (2) Who is eligible to apply
PPP Round one (1) recipients (PPP1) may apply for another loan of up to $2 million, provided they:
PPP loan terms
As with PPP Round 1 (PPP1), the costs eligible for loan forgiveness in PPP Round 2 (PPP2) include payroll, rent, covered mortgage interest, and utilities.
PPP2 also makes (adds) the following potentially forgivable:
To be eligible for full loan forgiveness, PPP borrowers will have to spend no less than 60% of the funds on payroll over a covered period of either eight (8) or twenty-four (24) weeks — the same parameters PPP1 had when it stopped accepting applications in August.
PPP borrowers may receive a loan amount of up to 2.5 times their average monthly payroll costs in the year prior to the loan or the calendar year, the same as with PPP1, but the maximum loan amount has been cut from $10 million in the first round to the previously mentioned $2 million maximum. PPP borrowers with NAICS codes starting with 72 (hotels and restaurants) can get up to 3.5 times their average monthly payroll costs, again subject to a $2 million maximum.
Simplified application and other terms of note
The new COVID-19 relief bill also:
Tax deductibility for PPP expenses
The bill also specifies that business expenses paid with forgiven PPP loans are tax-deductible. This supersedes IRS guidance that such expenses could not be deducted and brings the policy in line with what the AICPA and hundreds of other business associations have argued was Congress’s intent when it created the original PPP as part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136 (see the Dec. 3 letter from the AICPA and state societies to congressional leaders).
The COVID-19 relief bill clarifies that “no deduction shall be denied, no tax attribute shall be reduced, and no basis e shall be denied, by reason of the exclusion from gross income provided” by Section 1106 of the CARES Act (which has been redesignated as Section 7A of the Small Business Act). This provision applies to loans under both the original PPP and subsequent PPP loans.
It's a fallacy to think that you achieve absolute security and complete peace of mind, especially with your finances. You can prepare and save huge sums of money only to find out it was enough to cover situation X, but situation Y, the one you hadn't considered, not even close. If the pandemic taught us anything, it's that no industry, business, or our economy is immune from significant disruption given the right circumstances.
That said, there are steps we can take to better address the inherent risk we face in and our lives and especially with our finances, The below list comes from an article by Michael Kay and while I've used these points when providing professional advice, the way they're stated here is unlike how they're normally presented by an accountant or financial planner. I especially appreciate items #2, #4.and #6 as they don't require a degree in accounting or finance to see their importance.
Travis Raml, CPA